BILL ANALYSIS                                                                                                                                                                                                    

                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 865 (Alejo) - State Energy Resources Conservation and  
          Development Commission: contracts, grants, and loans: diversity.
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          |Version: July 6, 2015           |Policy Vote: E., U., & C. 9 - 2 |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Marie Liu           |
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          This bill meets the criteria for referral to the Suspense File. 

          Summary:  AB 865 would require the California Energy Commission  
          (CEC) to develop an outreach program to inform women,  
          minorities, disabled veterans, and gay, lesbian, bisexual, and  
          transgender (LGBT) businesses of CEC funding opportunities. This  
          bill would also require CEC contractors, grantees, and loan  
          awardees to report demographic information and to implement a  
          diversity outreach plan for subcontractor opportunities.

          Impact:  Ongoing costs of $300,000 annually to the Energy  
          Resources Program Account (General Fund) to the CEC for  
          implementation of the outreach program.

          Background:  Existing law directs various agencies to take actions to  
          increase contracting with women, minority, disabled veteran, and  
          LGBT businesses. For example the California Public Utilities  


          AB 865 (Alejo)                                         Page 1 of  
          Commission (CPUC) established the Supplier Diversity Program  
          under General Order 156 which encourages greater participation  
          in utility contracts by women, minority, disabled veteran, and  
          LGBT business enterprises. Under that program, regulated  
          entities must report annually to the CPUC a detailed and  
          verifiable plan, with goals and timetables, for increasing  
          participation from women, minority, disabled veteran, and LGBT  
          owned businesses in all categories of procurement. The CPUC is  
          then required to report annually to the Legislature regarding  
          the success of the program.
          On April 5, 2015, the CEC adopted a resolution to implement a  
          policy to reflect the CEC's commitment to diversity outreach for  
          all its programs. The resolution notes the unique ability of the  
          CEC to promote diversity by providing opportunities for  
          increased participation in CEC programs of small businesses and  
          women, minority, disabled veteran, and LGBT owned businesses. 

          Proposed Law:  
            This bill would require the CEC to develop an outreach program  
          to inform the most qualified loan and grant applicants and  
          contractors about funding opportunities that includes women,  
          minority, disabled veteran, and LGBT business enterprises. The  
          program must have a process for tracking the diversity of  
          contractors, loan recipients, and grant recipients.
          This bill would also require the CEC to develop guidelines that  
          require the a party that receives a contract, grant, or loan  
          from the CEC after July 1, 2017 that exceeds one million  
          dollars, or a different threshold or criteria as determined  
          appropriate by the CEC, to do the following: 

           Report to the CEC on the demographic makeup of its management.

           Develop and implement a detailed outreach plan for increasing  
            subcontractor opportunities for women, minority, disabled  
            veteran, and LGBT business enterprises in California. 

           Report to the CEC regarding its plan and its implementation  
            outcomes. This report would be a public document and would be  


          AB 865 (Alejo)                                         Page 2 of  
            required to be available on the CEC's website.

          The CEC would be required to develop these guidelines at a  
          publically noticed meeting where the public would be able to  
          provide comment.

          This bill would also require the CEC to consider establishing a  
          Diversity Task Force to consider and make recommendations about  
          diversity in the energy industry after the receipt of initial  
          plans and reports from contractors and grantees.

          Comments:  To implement the program created in the bill, the CEC  
          would need to first develop guidelines and establish new  
          policies and procedures for all funding agreements. Then the CEC  
          would need to work with award recipients to establish an  
          outreach plan, perform additional outreach, and to track the  
          diversity of award applicants. To accomplish these tasks, the  
          CEC anticipates needing approximately two new staff positions at  
          a cost of $300,000 annually. These costs would likely also cover  
          the costs of implementing the Diversity Task Force if the CEC  
          decides to do so convene the task force.

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